Financial service providers (“FSP”) approve loan applications and fund loans for applicants. In order to cover the loan investment risk, FSPs request documents for verifying loan deal components. The requested documents are funding requirements, and often are called stipulations, that vary from loan type to type (e.g., home, auto, business, etc. loans) as well as from applicant to applicant. Stipulations may include document requests pertaining to applicant employment, residence, phone verification, etc. Stipulations, for any loan type, are applicant specific and may illustrate the financial situation of the applicant. For example, an applicant's income is one of the most important funding stipulations for any type of loan, and it is considered a reliable factor in summarizing an applicant's financial capabilities in repaying the loan, or alternatively, how risky a particular loan may be for the FSP. Alternatively, other stipulations may include indicators of the applicant's financial situation such as total assets or credit score.
In particular, FSPs validate applicant's stated income from the loan application by comparing the stated income with data provided by third party income verification services. If the verified income is greater than the stated income then the income is validated. However, not every application type or applicant may have documentation proving a verified income greater than the stated income. In such situations, the FSPs use resources, including third party verifications, application processing time, additional communication with vendors, and manual checks, often requiring manual review of numerous financial documents, to determine whether applicant's actual income is, or is close enough, to the stated income to justify the investment risk. The riskier the investment, whether due to market factors or due to a lack of validated income, the higher the number of stipulations that an FSP may request an applicant to submit.
The entire loan application process from applicant's initial request for a loan to finalizing the loan deal terms with a contract offer is time consuming and tedious for the average applicant. The process becomes even more burdensome for sub-prime and near-prime applicants due to increased stipulation requirements, which in turn require additional processing of documentation from the FSPs. Validation of income is a critical aspect in loan application funding, and the current systems validate income through manual processes.
One solution, described herein, to optimize the loan application processes includes systems and methods for dynamically calculating deal terms twice, once with a first stated income, and next with a verified income, and determining if the income is valid based on several algorithms. This solution factors various tolerances and imperative factors such as the application type and types of financial documents which becomes complex for a group of multiple applicants. By optimizing the income validation, FSPs may increase the amount of money loaned (i.e. cashout) for low risk applicants and further minimize the burden associated with funding loans to sub- and near-prime applicants. Further, the loan application process may be further optimized through the implementation of a thorough monitoring process.
The present disclosure provides systems, methods, and devices to further improve the funding of loan applications through algorithms that optimize the income validation process. By comparing the stated income to verified income, from varying sources, these systems, methods, and devices increase the amount of approved loans and loan contract offers.